US JOLTS Preview: Job openings expected to tick up in November after October downside surprise

The US JOLTS data will be watched closely by investors ahead of the December jobs report.
Job openings are forecast to edge higher to 8.85 million on the last business day of November.
Further loosening in labor market conditions could ramp up expectations of a Fed rate cut in March.

The Job Openings and Labor Turnover Survey (JOLTS) will be released on Wednesday by the US Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of job openings in November, alongside the number of layoffs and quits.

JOLTS data will be scrutinized by market participants and Federal Reserve (Fed) policymakers because it could provide valuable insights regarding the supply-demand dynamics in the labor market, a key factor impacting salaries and inflation. While job openings have been trending down during 2023 – a sign of cooling demand for labor – these remain well above pre-pandemic levels.

What to expect in the next JOLTS report?

"Over the month, the number of hires and total separations changed little at 5.9 million and 5.6 million, respectively," the BLS noted in the October report and added: "Within separations, quits (3.6 million) and layoffs and discharges (1.6 million) changed little."

After declining steadily from 10.3 million to 8.9 million in the April-July period, job openings rose to 9.49 million in August. In September, this number retreated to 9.3 million and dropped to its lowest level since March 2021 at 8.7 million in October. For the upcoming November data, markets expect another slight uptick to 8.85 million.  Meanwhile, Nonfarm Payrolls increased by only 150,000 in October and by 199,000 in November.

Following the Federal Reserve’s (Fed) December policy meeting, the US Dollar (USD) has been struggling to stay resilient against its rivals. The USD Index fell over 2% on a monthly basis and touched its weakest level in five months at 100.60 in the last week of 2023. The Fed’s revised Summary of Economic Projections (SEP) showed that policymakers saw a total of 75 basis points (bps) rate cuts in 2024. Meanwhile, Fed Chairman Jerome Powell said in the post-meeting press conference that policymakers were talking about when it will be appropriate to lower the policy rate and added that they are very focused on “not making the mistake of keeping rates too high too long.” According to the CME Group FedWatch Tool, markets are pricing in an 85% probability that the Fed will lower the policy rate by 25 bps in March.

FXStreet Analyst Eren Sengezer shares his view on the JOLTS Job Openings data and the potential market reaction:

“JOLTS Job Openings data for October surprised to the downside and suggested that labor market conditions continued to loosen following unexpected increases in openings in August and September. A reading at or above 9 million could cause investors to scale back dovish bets and help the USD find demand. On the other hand, a print between 8 and 8.5 million could make it difficult for the currency to hold its ground. However, a significant decline could also hurt the risk mood and trigger a sell-off in US stocks. In this scenario, the USD’s losses could remain limited.”

When will the JOLTS report be released and how could it affect EUR/USD?

Job openings numbers will be published at 15:00 GMT. Eren points out key technical levels to watch for EUR/USD ahead of JOLTS data:

“EUR/USD started the new year under bearish pressure and declined below the lower limit of the ascending regression channel coming from early October, currently located near 1.1000. At the same time, the Relative Strength Index (RSI) retreated toward 50, reflecting a loss of bullish momentum. The 1.0950 level (Fibonacci 23.6% retracement of the October-December downtrend) aligns as the first support for the pair. If this level fails and starts acting as resistance, 1.0850 (200-day Simple Moving Average (SMA), Fibonacci 38.2% retracement) could be set as the next bearish target.

On the upside, buyers could show interest in case EUR/USD returns within the ascending channel by flipping 1.1000 into support. In this scenario, 1.1100 (mid-point of the ascending channel) could be seen as the next resistance before 1.1140 (December 28 high).”